LLM Theses and Dissertations (2023)

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Browsing LLM Theses and Dissertations (2023) by Author "Thuranira, I. K."

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    Towards anticipating and mitigating the legal risks of bank mergers on the welfare of consumers of financial services
    (Strathmore University, 2023) Thuranira, I. K.
    Mergers and acquisitions (MNAs) in the banking sector are characterized by unique aspects that are inherent in the sector considering that the sector is regulated separately. Therefore, the extent to which bank mergers alter the market composition and shifts in market power and dominance expose consumers of financial services to legal risks that are anchored on consumer protection concerns. This is considering that such changes that emerge from such MNAs could result in change in bank behaviour in a manner that has bearing on cost of credit, financial exclusion and resort to alternative informal financial services under which consumers do not enjoy protection. Historically, the absence of proper regulation of the financial sector has led to recessions, depressions and financial crises emerging from proliferation of bank MNA transactions. This study, therefore, investigates the nature of these legal risks, their effects on the welfare of the consumers of financial service; the extent to which the Kenyan legal framework anticipates and mitigates against the same as well as best practices that have been implemented to address these concerns. It proceeds to find that bank MNAs pose the risk of barring competition, increasing the cost of credit at the expense of vulnerable consumers of banking services, and other contemporary risks such as the risk of abuse of information-based market power and the risk of creeping mergers. Hence, it proceeds to identify the important role of the law in striking a balance between market power and efficiency gains of bank MNAs; the need to regulate information-based market power; and the need to subject unregulated mergers to scrutiny for possibility of creeping mergers; among other findings. This is important considering that bank mergers bear effects that traverse different sectors that are separately regulated, hence the need to iterate the utility of the law in facilitating regulatory coordination to anticipate, prevent and mitigate against these legal risks that otherwise remain hidden. Key Words: Mergers and acquisitions, consumers, financial services, legal risks